The FTC's 'Operation Failed Resolution': A Behind-the-Scenes Look

With four enforcement actions in January, the Federal Trade Commission (FTC) launched “Operation Failed Resolution” against what it considers to be “fad” weight-loss products. The four companies targeted were SENSA, L’Occitane, HCG Direct and Lean Spa. My initial thoughts appeared in Response’s DRMA Voice E-newsletter on Jan. 14 and can be found here: responsemagazine.com/drma/ftc-cracks-down-weight-loss-provisions-again-6738.

The initiative was accompanied by the issuance of seven “Gut Check” claims which the FTC maintains cannot be supported by any science and which it encouraged media outlets to flatly reject. While the FTC’s skeptical view of quick-fix weight-loss solutions is not new, a closer look at this initiative provides insight into current FTC thinking.

The Clinical Studies Debate
While in the past the FTC has sometimes required only one human clinical study (RCT) in its consent orders, all four of the consent orders here require two RCTs on the product itself or on a substantially equivalent product. In addition, these orders require the two tests to be conducted by separate, independent experts.

POM Wonderful challenged this authority by refusing to sign a consent order containing such requirements. That case is still in litigation, although the most recent decision by the FTC held that it’s appropriate to require at least one RCT to support the health claims that POM made.

Commissioner Maureen Ohlhausen has publicly raised a question that many have been wondering about — has the FTC moved too far away from its historical flexible approach to substantiation? While Olhausen voted in favor of the consent orders in the January cases, she voted against a consent order issued against Gene Link and foru Intl., marketers of dietary supplements, that required two RCTs. Ohlhausen said, “Adopting a one-size-fits-all approach to substantiation by imposing such rigorous and possibly costly requirements for such a broad category of health- and disease-related claims may, in many instances, prevent useful information from reaching consumers in the marketplace and ultimately make consumers worse off.”

In contrast, Chairwoman Edith Ramirez and Commissioner Julie Brill issued a statement supporting the consent order requirements in the Gene Link case. They noted that the broader relief in that case was reasonable and appropriate but stated that this order should not be viewed as a de facto requirement of two clinical studies on any health- or disease-related claim.

For the moment, marketers should assume that the Commission will continue to look for at least one, and in the case of weight-loss claims, two double-blind clinical studies supporting those claims.

Endorsement and Enforcement
The action against SENSA is a harsh reminder that the FTC is serious about enforcement of its testimonial and endorsement guides. Marketers should review the procedures by which they are obtaining testimonials to ensure they are not running afoul of the guides.
These settlements also reflect the increasingly aggressive positions that FTC is taking, both in the scope of the parties targeted and the magnitude or relief sought. In the SENSA case, for example, the FTC named not only the company but also CEO Adam Goldenberg and Dr. Alan Hirsch, the expert who performed the testing.

These cases also reflect the FTC’s increasing demands for substantial monetary relief. The FTC imposed a judgment of $46.5 million against SENSA ($20 million suspended due to an inability to pay) and a judgment of $3.2 million against HCG — representing all sales — which was also suspended due to inability to pay.